Deflation: When Austrians become interventionists |
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Authors: | Philipp Bagus |
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Institution: | (1) the University of Münster, Germany |
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Abstract: | Conclusion The aforementioned six Austrian economists, especially Rothbard, refute most arguments that mainstream economists mention
against deflation. To differing degrees they are much less deflation-phobic than the mainstream. Nevertheless, when it comes
to deflation, they diverge very much and do not staunchly champion the free market. In contrast to their laissez-faire views
on most other subjects, in order to fight deflation, they come up with an arsenal of state interventions, like government
bailouts, redistribution of gold, amnesty and privileges for the banking system, government-planned monetary reforms, public
works, credit expansion, and inflation.
Curiously, with these interventions they want to prevent the liberating deflation, i.e., the free market reaction to an abstention
of all government interventions into the monetary system, especially the fractional reserve banks’ privileges and amnesty.
They fail to see that deflation is a fast, smooth, direct, and ethical way to a sound financial system. |
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